Mn/DOT settles with Winona Leasing

(7/13/2015)

by CHRIS ROGERS

When the Minnesota Department of Transportation (Mn/DOT) officials gave Winona Leasing and Sales owner John Cunningham its final offer for his car rental business and neighboring properties in the path of the new Winona bridge, he thought he was being lowballed. This year, he was vindicated. Mn/DOT offered Cunningham less than $600,000 before the legal wrangling began, but ultimately settled an eminent domain court case with Cunningham by paying $900,000 for the land. The difference was so great that late last month, Winona County District Court Judge Nancy Buytendorp ordered the state to pay for some of Cunningham's legal fees.

When Mn/DOT needs to acquire land for public infrastructure projects like the construction of the new Winona bridge, it tries to get property owners to voluntarily sell their land to the state. If that does not work, then the state flexes its legal muscle and seizes the land. Later, court-appointed real estate experts — called condemnation commissioners — determine a fair price for the seized properties, an award, and a judge orders Mn/DOT to pay it.

The condemnation commissioners had already begun to meet to judge the value of Cunningham's property, but had not reached a conclusion when, in February, Mn/DOT and Cunningham reached their $900,000 settlement, according to court documents.

"I looked at some of the other offers and I looked at the one they gave me and I though it was ridiculous," Cunningham said of Mn/DOT's purchase offer. "They finally came to their senses and agreed to what we could live with, not what we were happy with, but what we could live with," he added.

Cunningham is glad Winona is getting a new bridge; it is needed, he said. However, he did not ask to have his property seized. From negotiating with the state to relocating his business, the whole process took a lot of time and effort. "It was a lot of work we don't get reimbursed for," he stated.

Governments are supposed to give citizens a fair price for their property when they seize it for a public project, but sometimes getting a price the property owners consider to be fair requires them to hire a lawyer to argue against the state's lawyers. Under state law, when the final price reached through the eminent domain process exceeds the government's final written purchase offer by 40 percent or more, the government must pay the property owner's legal fees.

The price Mn/DOT and Cunningham settled on was more than 50 precent greater than Mn/DOT's final written offer.

Late last month, Winona County District Court Judge Nancy Buytendorp ordered the state to pay $32,000 of Cunningham's legal fees and costs. Cunningham's total legal fees were far higher. Cunningham had agreed to pay his attorney one third of the increased amount Cunningham ultimately received for his property. Because that difference between the offer and the settlement was so great — $300,000 — the attorney fees were approximately $100,000. Mn/DOT attorneys argued those fees were unreasonable. It is Mn/DOT's own fault that the difference between the final award and the offer was so great, Cunningham's lawyer countered. "Mn/DOT should not … be permitted to benefit from its undervaluation," the attorney wrote. Ultimately, Buytendorp sided, more or less, with Mn/DOT. She agreed that ordering the state to pay $100,000 in legal fees would be unreasonable.

Mn/DOT officials did not respond to interview requests for this story.

Severson property still on court docket

Mn/DOT was able to get most of the property owners in the path of the Winona bridge project to sell their land willingly. Mn/DOT bought the homes and apartments west of the existing bridge, AmericInn owner Catherine Nichols, of Lake City, agreed to sell her riverside hotel for $3.35 million, and the Dahl family sold its downtown dealership and service center for $2.6 million.

Now that Mn/DOT settled with Cunningham, only one property remains on the condemnation commissioners' docket: the Severson Sinclair gas station. It is unclear when a decision will be reached. Under a schedule set last fall, the commissioners have until this November to determine a fair price for the land. The Seversons are also seeking compensation for lost business as a result of the seizure, according to court documents, and Cunningham said the court is still determining how much the state should reimburse his company for its relocation costs.